Dear Members,
My client has invested in 'Icici Prudential Life Stage Assure Pension' plan in Sep 2009 which is due for maturing in Sep 2024. The policy documents states that the policyholder has an option to commute up to one third of the fund value or any other proportion available as per the prevailing income tax laws as a lumsum and the balance as annuity. As per the Icici Prudential Officer, the tax is exempt only up to one third of the pension fund value which I disagree. As per Section 10(10A), (i) the commuted pension of any Government employees is fully exempt; (ii) In case of any other employee (a) One third of pension value commuted is exempt if the employee has received Gratuity (b) Any other case, one half of the pension fund value commuted is exempt; (iii) any commuted value from pension fund set up under section 10 (23AAB).
Section 10 (23AAB) states that any income from pension fund setup by LIC post 1961 and any other insurer provided the scheme is approved under IRDA and the individual has contributed in the scheme for the purpose of receiving pension.
The Icici Prudential is ready to commute entire fund value without any TDS. Will the 100% commuted value be exempt under section 10 (10A) (iii)? As per my understanding, it should be exempt. Please let me know your views.
CAclubindia
